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Old Republic (ORI) Benefits From Solid Segmental Performance

Solid underwriting results, strong rate increases and a solid balance sheet should continue to support Old Republic (ORI).

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This story originally appeared on Zacks

Old Republic International Corporation ORI has been benefiting from new business production, premium rate increases, higher purchase transactions and prudent capital deployment.

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Earnings Surprise History

Old Republic International has a decent earnings surprise history. It beat estimates in each of the last four quarters, with the average being 54.63%.

Return on Equity (ROE)

Old Republic International’s ROE for the trailing 12 months is 13.9%, better than the industry average of 9.5%, reflecting the company’s efficiency in utilizing shareholders’ funds. 

Zacks Rank & Price Performance

Old Republic International currently carries a Zacks Rank #3 (Hold). In the past year, the stock has rallied 33.3%, outperforming the industry’s increase of 5.8%.

Zacks Investment ResearchImage Source: Zacks Investment Research

Style Score

Old Republic International has a favorable VGM Score of A. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.

Business Tailwinds

Strong premium rate increases for most lines of coverage and new business production, as well as rising premiums in commercial auto, financial indemnity and property coverages, should benefit the premium growth of the General Insurance segment of Old Republic International.

The title insurer expects to continue to achieve strong rate increases on most lines of coverage other than workers' compensation.

Riding on a continued low-interest rate environment, solid real estate market along with increases in purchase transactions, the net premiums and fees earned from the Title Insurance segment of ORI are expected to improve. Both agency and direct production channels continued to generate improved results.

A diversified portfolio of specialty products in both General Insurance and Title Insurance should continue to deliver growth and profitability.

Solid underwriting results should improve the consolidated combined ratios. The title insurer targets a combined ratio in the range of 90% to 95% in the General Insurance segment. The insurer has maintained the combined ratio below 100 for consecutive 15 years.

Old Republic International boasts a robust balance sheet with an improving cash balance and low leverage ratio. Total debt to capital of 20% compares favorably with the industry’s measure of 28.9%.

Backed by its operating strength, the third-largest title insurer in the country has a solid track record of increasing dividends for 40 straight years and has paid out dividends in the last 80 years. It currently yields 3.6%, which is higher than the industry average of 2.1%. It makes the stock an attractive pick for yield-seeking investors.

In the third quarter of 2021, the insurer approved a special dividend that marked the second special dividend in 2021. Its solid financial foundation and operational performance should continue to support shareholder returns.

Stocks to Consider

Some better-ranked stocks from the insurance space include Enact Holdings ACT, CNO Financial Group CNO and First American Financial FAF. While Enact Holdings sports a Zacks Rank #1 (Strong Buy), CNO Financial and First American carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Enact Holdings’ earnings surpassed estimates in each of the last four quarters, the average beat being 5%.

In the past year, ACT has gained 3.6%. The Zacks Consensus Estimate for Enact Holdings’ 2022 earnings has moved 2.5% north in the past 60 days. Enact Holdings’ expected long-term earnings growth rate is pegged at 11.1%.

CNO Financial’s earnings surpassed estimates in three of the last four quarters, the average beat being 13.19%.

In the past year, CNO has gained 11.7%. The Zacks Consensus Estimate for CNO Financial’s 2022 earnings has moved 2% north in the past 60 days.

First American’s earnings surpassed estimates in each of the last four quarters, the average beat being 29.19%.

In the past year, First American has gained 50.5%. The Zacks Consensus Estimate for 2022 earnings has moved 0.4% north in the past 30 days.



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CNO Financial Group, Inc. (CNO): Free Stock Analysis Report

 

First American Financial Corporation (FAF): Free Stock Analysis Report

 

Old Republic International Corporation (ORI): Free Stock Analysis Report

 

Enact Holdings, Inc. (ACT): Free Stock Analysis Report

 

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